Former President Donald Trump has declared that, if re-elected, he would prevent the Federal Reserve from launching a digital dollar, dealing a potential setback to advocates who argue that such a move would enhance the efficiency of the payment system.
In a speech before New Hampshire’s primary election, Trump emphasized his commitment to protecting Americans from what he described as “government tyranny.” Specifically, he stated, “As your president, I will never allow the creation of a central bank digital currency.”
While the Federal Reserve has not made a final decision on introducing a fully digital version of the U.S. dollar, it has been exploring the technological feasibility of such a move. Federal Reserve Chair Jerome Powell has indicated that any decision to move forward would require explicit approval from Congress and the executive branch.
The concept of a publicly available digital dollar has become politically sensitive, with Florida Governor Ron DeSantis, a potential primary opponent for Trump, vehemently opposing the establishment of a central bank digital currency. DeSantis has raised concerns about potential government surveillance of citizens’ spending, drawing parallels with China’s use of its own digital currency for monitoring purposes.
The design specifics of a potential Central Bank Digital Currency (CBDC) are still under consideration by Federal Reserve officials. A 2021 paper outlined the possibility of a token held in digital wallets managed by banks or regulated financial institutions, rather than allowing direct deposits at the central bank for ordinary Americans. The proposal emphasized the need to strike a balance between consumer privacy and the transparency required to prevent criminal activities, with banks responsible for safeguarding transaction information and reporting suspicious payments under anti-money laundering rules.
It remains uncertain whether a digital dollar would be created exclusively for interbank payments, potentially reducing transaction costs across borders. The debate over the digitalization of the U.S. dollar continues amid ongoing technological advancements and regulatory considerations.
